Nonbanks continued to gain ground in the GSE servicing market during the first quarter of 2018 despite some significant declines at several top companies. Nonbanks serviced $1.750 trillion of single-family loans tied to Fannie Mae and Freddie Mac mortgage-backed securities as of the end of March, a new Inside The GSEs analysis reveals. That was up 1.8 percent from December and a stunning 15.7 percent from March 2017. The nonbank share of GSE servicing edged up to 37.5 percent. Depository institutions – banks, thrifts and credit unions – saw a modest gain in aggregate GSE servicing during the first three months of 2018, but their combined market share fell to 58.7 percent.
Sen. Mike Crapo, R-ID, chair of the Senate Committee on Banking, Housing and Urban Affairs, isn’t giving up on housing-finance reform in 2018, even though many industry observers already have. He said it’s still a “high priority,” while speaking at the Mortgage Bankers Association’s National Advocacy conference in Washington this week. Crapo disagreed with comments made earlier in the day by Housing and Urban Development Deputy Secretary Pam Patenaude, who said there aren’t enough legislative days left to do GSE reform this go around. And he was adamant in saying he’s not ruling out the possibility of reform happening in this Congress.
Freddie Mac introduced a new conventional 3 percent downpayment program that is open to a wider range of borrowers with no income restrictions or limitations as to where the borrower lives. The new mortgage product, HomeOne, was created to allow lenders flexibility when it comes to helping borrowers anywhere in the country become homeowners and overcome the common hurdle of a lack of downpayment resources, said Danny Gardner, Freddie’s senior vice president of single-family affordable lending and access to credit. He said HomeOne is great for potential borrowers looking to...
Pershing Square Holdings, one of the largest institutional investors in Fannie Mae and Freddie Mac common stock, is doubling down on its investment in the two mortgage giants. But it’s taking a different tack, buying up junior preferred stock rather than increasing its holdings of common. The change in strategy was mentioned in the firm’s annual report to shareholders and comes at a time when the chances of housing-finance reform look nil for 2018. How much PSH paid for the junior preferred is unknown. According to the annual report, “Our preferred stock represents approximately 21 percent of our total investment in Fannie and Freddie, or about 1 percent of net assets.”
Automated appraisals may be less biased and give more accurate property value estimates, according to a new working paper by the Federal Housing Finance Agency’s Office of Policy Analysis and Research. This is especially true in rural areas where there are fewer comparable stats and more heterogeneity across homes, said the authors, Alexander Bogin and Jessica Shui. In fact, the data suggest that more than 25 percent of rural appraisals exceed the associated contract price by more than 5 percent. The study was based on GSE loan acquisitions from 2012 to 2016.Moreover, given the bias found in appraisals, some researchers have considered including automated...
After losing an appeal against the Federal Housing Finance Agency last year, Nomura Securities has asked the Supreme Court of the United States to hear its case and help overturn an $800 million penalty it owes the FHFA in a settlement. And the Structured Industry Finance Markets Association is helping in that effort. Nomura hopes the high court can determine whether the Housing and Economic Recovery Act’s extension of the statute of limitations applies to statutes of repose. The firm argues that too much time had passed for the FHFA to bring charges.
The Federal Home Loan Banks will be able to use their own models and methodologies for internal assessments of mortgage asset credit risk next year, according to a bulletin issued by the Federal Housing Finance Agency late this week. The FHFA provided guidance on the models, which would apply to acquired member asset (AMA) mortgage pools, mortgage-backed securities, and collateralized mortgage obligations. “A bank should select a credit-risk model that is capable of producing loan-level estimates of potential credit loss, and that can accept as an input user-defined macroeconomic stress scenarios disaggregated to at least the state level,” said the FHFA.
Federal Housing Finance Agency Director Mel Watt said he has noticed an uptick in the number of minority-owned firms active in Fannie Mae and Freddie Mac transactions. Watt, speaking at the National Association of Minority Mortgage Bankers of America conference in Atlanta earlier this month, discussed the importance of diversity and inclusion in the real estate industry. He noted that although a lot of work still needs to be done, the results so far have been encouraging. “Perhaps most exciting are the results we are seeing at the financial transaction level where minority-owned firms are now involved in...
Bucking the popular notion that housing-finance reform should come with a government guarantee, a real estate professor from George Mason University suggests divvying up the risks so it’s not just on the federal government. Anthony Sanders, distinguished real estate professor in the university’s school of business, said most housing-finance reform proposals are “the same things wrapped in different color paper.” In a blog post last week, Sanders said that essentially proposals want to shut down Fannie Mae and Freddie Mac and open a government insurance corporation that requires an explicit guarantee at the expense of taxpayers.
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